EXPO 2022 | Aug 14-17 | Bally's Las Vegas

The Nightmare of Dynamex

EXPO Legal Panel:
The Nightmare of Dynamex


As reported in the March issue of ED Magazine, the Dynamex case has meant that clubs in California have had to change the employment classification of their entertainers—from independent contractors to employees—literally overnight. So, what has that meant for them—and what does it mean for you? That’s what we’ll discuss at EXPO 2019.

The California Supreme Court’s recent Dynamex decision has forced the state’s gentlemen’s clubs to make their entertainers employees and it’s just a matter of time until it spreads to other states. The EXPO 2019 Dynamex Legal Panel brings together two premier California club operators, Spearmint Rhino president Kathy Vercher and BSC Management managing member Joe Carouba, to explain how Dynamex has impacted them and what steps they’ve each had to take in their attempts to remain profitable and compliant without losing all of their entertainers. In addition, top employment attorney Tammara Bokmuller, who is challenging Dynamex in a major suit, has also been added to the panel.
The Spearmint Rhino chain has 17 U.S. clubs, 14 of which are in California (though not all are under the brand name “Spearmint Rhino”). Clearly, the Dynamex decision is having a major impact on Rhino’s California operations and it’s almost certainly just a matter of time until Dynamex’s mandate spreads to the other states in which they operate.

“It’s such a burden on the staff, the entertainers; it’s like an entirely new culture in the clubs,” explains Vercher, who revealed some of the changes her clubs have made to comply with Dynamex. “The girls have always wanted to be able to come and go as they please, but that’s all changed now. Now, it’s, ‘You’re employees. We want you here at 11 a.m., you’ll clock out at 5 p.m. and you’ll dress like this and talk like this,’ But I didn’t want to do any of that because it will go against what many of them are attracted to: the freedom of the lifestyle.

“We’ve tried to just make it as less impactful on them as possible,” Vercher explains. “Which has then become a burden on the managers and extra staff I’ve had to hire to manage all this because we went from giving 10 people their 30-minute (required by law) breaks to now, you’re scheduling entertainers.”

California labor law requires timely, periodic 10- and 30-minute breaks for newfound employee entertainers (and all other employees) or else there’s a penalty. The timeliness of these breaks plays havoc with profitable VIP room sessions for entertainers, notes Vercher. “Now you must get these breaks scheduled quickly, making sure they’re happening at the right time,” she explains. “And you don’t want to pull a girl from a customer.”
Vercher notes that every night in the clubs has become a juggling act, as everyone adjusts to their “new normal.”

“Do we fully understand the full ripple effect right now,” questions Vercher? “No, we don’t, because it’s all so new. What we rolled out as, and what it will be in probably three or four months, is evolving. The entertainers (in California) will still be employees, but how much will I have to change the way owe operate as a corporate entity? We don’t fully know that impact yet.”

Vercher explains that she dreads the fact that she must now prepare for the inevitable spread of Dynamex-like requirements across the country. “As chain operators, we understand that when something like Dynamex happens in one state, it’s a trickle-down effect. I have to now look at all of our other clubs in all of our other states to prepare for something like Dynamex.”

Carouba says due to Dynamex, BSC Management’s 10 San Francisco clubs have been forced to operate with a completely different business model than before.
“It might look like the same club, but it has to be run completely different,” explains Carouba. “We must now schedule entertainers, like all other staff, because we can’t have entertainers on the floor who aren’t making money. It used to be, the club with the most girls wins. Now, if customers come in to a smaller club at 6 p.m. and see four entertainers, you won’t be able to grow your business with that.”

“As chain operators, we understand that when something like Dynamex happens in one state, it’s a trickle-down effect. I have to now look at all of our other clubs in other states to prepare for something like Dynamex happening there.”
- Kathy Vercher, President of Spearmint Rhino

2019Tammara Bokmuller 2019 carouba winner 2019 kathy vercher
Tammara Bokmuller Joe Carouba Kathy Vercher

 

Carouba adds, “We’re finding that this business model just doesn’t work with some of our smaller clubs, where the entertainers were never big earners. The entertainers are paid minimum wage, plus commission, which in San Francisco, with all in could cost the employer up to $23-24 an hour! So if she’s on the floor for six hours and does 3-4 dances, you’re upside down.”

“We think what’s going to happen is, unfortunately, some of our smaller clubs will not survive the changeover,” says Carouba. “Our dancer pool in San Francisco has already shrunk by several hundred because you just can’t afford to have them on staff. So this idea of protecting the entertainers through employment has already cost 200-400 San Francisco jobs.”

Bokmuller, a partner in the San Diego-based Bowman and Brooke law firm, has extensive experience in employment law having handled a myriad of employment disputes for employers including class action litigations, wage-and-hour disputes, unemployment claims, workers compensation trials, as well as wrongful termination, retaliation and discrimination claims.

She is representing the Southern California Déjà Vu clubs in a pending federal class action challenge of Dynamex.
“It’s the same as all of the litigation Déjà Vu has been involved with for the past 10 years with the ongoing fight of whether these dancers are properly classified as independent contractors versus employees, in light of Dynamex.
“The California courts appear to be holding that Dynamex is retroactive, making things even more difficult for the clubs,” adds Bokmuller.  

She says the Déjà Vu clubs have California Employment Development Department (EDD) decisions, going back 20-30 years, confirming their method of treating entertainers as independent contractors is proper. She notes the courts are interpreting Dynamex as not necessarily new law, just a different interpretation of current law with the substitution of the Dynamex employment test for the previous Borello test.
“While the courts feel it’s the same thing,” explains Bokmuller, “we obviously don’t agree. We think it’s a brand-new completely unconstitutional test and that they’re holding it as retroactive.”
Bokmuller cautions club operators across the country. “California is not the first state to introduce an ABC test. Several other states already use the ABC test to determine whether individuals should be classified as independent contractors as opposed to employees.
 
“Indiana, Massachusetts, Nebraska, Nevada (though Nevada has a carve-out, deeming dancers as independent contractors), New Hampshire, New Jersey, New Mexico, Tennessee and Vermont also use ABC tests and Washington State is considering pending legislation to embed an ABC test in its labor laws.”
The EXPO 2019 Dynamex Legal Panel on August 14 will get you up to speed on this all-important threat to your club’s profitability and its very survival and provide the information you need to know.

This article briefly summarizes extremely complex legal issues and is provided for general information purposes only and is intended to provide neither an exhaustive analysis of these matters nor any specific legal advice or recommendation. Laws vary by state and municipality. The positions and opinions expressed by the attorney and club operators represented here are theirs alone, and do not necessarily reflect those of ED Publications. Club operators and others are strongly encouraged to consult their attorneys for specific advice on how these issues will affect them and what measures to take. Larry Kaplan and ED Publications do not guarantee the accuracy of this information.

Larry Kaplan has for 19 years been the Legal Correspondent for ED Magazine. Mr. Kaplan is a broker in the sales and purchase of adult nightclubs and adult stores and the Executive Director of the ACE of Michigan adult nightclub state trade association. Contact Larry Kaplan at 313-815-3311 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it..

 

 

 

 

What is the Annual Adult Nightclub & Exotic Dancer Awards Show?


The Annual Adult Nightclub & Exotic Dancer Awards Show — popularly known as the ED’s Awards Show — is the ONLY national awards show for the multi-billion-dollar gentlemen’s club industry and is produced by ED Publications. Established in 1998, the ED’s Awards Show is the marquee event of the Annual Gentlemen’s Club EXPO, the only national convention & tradeshow for the gentlemen’s club industry since its inception in 1993.

TheEDs logo

The ED’s Awards Show honors the country’s top gentlemen’s clubs, touring feature entertainers and club staff. The categories for clubs and entertainers have evolved over the years to keep pace with the industry’s evolution. Today, awards are given to clubs in four regions—East, South, Central and West—with designations for Club of the Year and “Small” Club of the Year in each region (“small” club is determined by physical size or the size of the market in which the club is located). There are also club awards for “Feature” Club of the Year (clubs which book touring feature entertainers regularly), Urban Club of the Year, International Club of the Year (clubs outside of the U.S.), and Club Chain of the Year (“chains” are club brands which own multiple locations, such as Rick’s Cabaret, Deja Vu, Spearmint Rhino, Penthouse Clubs, etc.).

The most prestigious club awards isOverall Gentlemen’s Club of the Year,” a category which typically boasts eight-to-ten nominees from across the U.S. These are clubs that have either won or were nominated in their award region multiple times.

The ED Awards also honors club staff, as they are the ones largely responsible for helping their clubs achieve their success. There are three categories for staff awards: General Manager of the Year, Club Employee of the Year and DJ of the Year.

In the Entertainer award category, there are six awards presented each year. They include Newcomer Entertainer of the Year, Club Favorite Entertainer of the Year, Adult Movie Entertainer of the Year, International Showgirl of the Year, Miss ExoticDancer.com of the Year, and the top award for entertainers, Overall Feature Entertainer of the Year. The criteria for the Overall Entertainer of the Year category has remained steady since the award’s inception: Nominees for this award include the top “showgirl” entertainers who also have the most club bookings. Each of these Entertainer of the Year nominees perform live during the Annual ED’s Awards Show.

Beginning in 2014, however, two Entertainer of the Year nominees were gathered from the Annual EDI (Exotic Dancer Invitational) contests, which are also produced by ED Publications. The top winners from the EDI East and EDI West contest are automatic nominees for Entertainer of the Year, while remaining Entertainer of the Year nominee(s) are chosen by the online nominations voting process.

Finally, ED Publications inducts at least one industry professional each year into its Hall of Fame. The Hall of Fame is reserved for those individuals who have helped improve or transform the gentlemen’s club and/or feature entertainment industries over the course of their career.

How are the nominees and winners decided?

For almost a decade now, the balloting process for the ED’s Awards Show has been conducted online (previously, all balloting was done through the mail on paper ballots). It starts with the “Pre-Nomination Voting Ballot,” where anyone from the gentlemen’s club industry can log on to the ED’s voting website (theEDawards.com) to vote for those clubs, entertainers and staff who they feel deserve to be included on the Final Ballot. The Pre-Nominations ballot closes after a two-week period, and the ED staff views the results before determining the clubs, entertainers and club staff who will make the Final ED’s Awards Ballot.

Once the Final Ballot is completed, it is also posted online at theEDawards.com for voting. The Final Ballot remains open for at least two weeks (typically in June), but the winners are not disclosed until the Annual Gentlemen’s Club EXPO is held (the 2021 EXPO is scheduled for May 23-26 at the InterContinental Downtown Hotel in Miami).

 

When are the winners announced?

ED’s Award Winners are announced each year at the Annual Gentlemen’s Club EXPO. But because it is impossible to capture people’s attention for a three-hour-plus awards show, ED Publications moved several award presentations to the EXPO’s Opening Night Party (held each year the night before the main ED’s Awards Show). Between eight and ten ED’s Awards are handed out during the well-attended Opening Night Party; these awards typically include the club staff awards, as well as many of the entertainer awards. The remaining awards are handed out the second night of the EXPO (typically a Tuesday night), and these awards include the gentlemen’s club awards, Hall of Fame award(s) and Overall Feature Entertainer of the Year.

EXPO 2019 VIP Packages

2019 VIP Package

VIP 2019 house 2Are you just an attendee—or are you a "Friend of EXPO"?

Everyone who attends the Annual Gentlemen's Club EXPO is supporting the industry's only convention. But there are those who want to stand out from the crowd and show their support in a much more prominent way. For those club owners and operators who want to take their EXPO experience to the next level, ED Publications offers the "Friends of EXPO" Sponsorship & Registration Package.

For the Friends of EXPO, we've put together a sponsorship and registration package that will not only cement your identity as an EXPO VIP, but will also give you and your club's brand a unique level of visibility at the industry's premier event. The Friends of EXPO Sponsorship & Registration package includes everything you see below, including: Six all-access EXPO badges, six ED's Awards Show tickets, EXPO sponsorship signage, a free ad in our Official EXPO Program Guide and more!

 

 

EXPO 2020 VIP Packages

2020 VIP Package2

Are you just an attendee—or are you a "Friend of EXPO"?

Everyone who attends the Annual Gentlemen's Club EXPO is supporting the industry's only convention. But there are those who want to stand out from the crowd and show their support in a much more prominent way. For those club owners and operators who want to take their EXPO experience to the next level, ED Publications offers the "Friends of EXPO" Sponsorship & Registration Package.

For the Friends of EXPO, we've put together a sponsorship and registration package that will not only cement your identity as an EXPO VIP, but will also give you and your club's brand a unique level of visibility at the industry's premier event. The Friends of EXPO Sponsorship & Registration package includes everything you see below, including: Six all-access EXPO badges, six ED's Awards Show tickets, EXPO sponsorship signage, a free ad in our Official EXPO Program Guide and more!

EXPO 2021 VIP Packages

2021 VIP Package v2

Are you just an attendee—or are you a "Friend of EXPO"?

Everyone who attends the Annual Gentlemen's Club EXPO is supporting the industry's only convention. But there are those who want to stand out from the crowd and show their support in a much more prominent way. For those club owners and operators who want to take their EXPO experience to the next level, ED Publications offers the "Friends of EXPO" Sponsorship & Registration Package.

For the Friends of EXPO, we've put together a sponsorship and registration package that will not only cement your identity as an EXPO VIP, but will also give you and your club's brand a unique level of visibility at the industry's premier event. The Friends of EXPO Sponsorship & Registration package includes everything you see below, including: Six all-access EXPO badges, six ED's Awards Show tickets, EXPO sponsorship signage, a free ad in our Official EXPO Program Guide and more!

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